Ranging from medieval times when gold was the only currency, to modern times until the currency was pegged against the gold standard, how good/bad was the economy?
Was there any inflation? If so, how did it occur without artificial manipulation of the economy.
In: 79
As others have clarified, it didn’t. The gold standard was formalized in the 1870s and was generally discontinued after the 1920s.
You mention inflation, but the gold standard actually has the opposite problem: deflation. With the gold standard, the currency in an economy is tied to an amount of gold. This is to give people participating in the economy assurance that the currency is backed by something stable and valuable. However, gold is finite and as more people participate in the economy, individual units of currency backed by this gold become scarcer and more valuable. Money becoming more valuable over time is a big problem.
If I buy something for $1 and then sell it at the same *value* a year later (which is now equal to only $0.75, let’s say), I’ve lost money. Holding onto the dollar, not spending it, would’ve been the most prudent course of action. Meaning that, at a high level, the economy stagnates as no one wants to spend money when it could be worth more in the future. It’s sort of like building the effects of a recession into your economy permanently.
Edit: ELI5ed it a little more.
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